Legal Perspective: Money laundering and professionals

Money laundering is not only related to large amounts of drugs money or funds related to terrorism. Indeed, it is so commonplace that few lawyers seem to regard it as an issue and, perhaps, do not even identify it as a risk.

The law in the UK relates to the proceeds of any criminal activity, regardless of its nature. It doesn't matter where it was committed.

If it would have been criminal activity in the UK, the proceeds will be laundered money. Even tax evasion in the form of the sale of goods overseas without charging the appropriate VAT will be an offence covered by the legislation.

In case, money ends up in the hands of some one and he has a suspicion that it may be the proceeds of a criminal conduct there is a duty to report it. Of course, this is subject to complex provisions relating to client confidentiality, which apply to lawyers.

Moreover, there are additional risks if the entity is subject to registration under the Financial Services Act 1986, as the great majority of professions as solicitors or accountants are, because they have to appoint officers and train members of staff who may come into contact with laundered money.

Any financial institution taking money from any one is entitled to assume that he has made all necessary checks to be satisfied that the money is not "dirty". They are entitled to rely on that assumption.

Lawyers and accountants are the most likely channels for laundering of money. Criminals need to find an outlet for the proceeds of crime and placing it, for value, in the hands of legitimate business is one of the easiest, and from the point of view of the criminal, safest ways.

They rely on the ignorance, greed, stupidity or desperation of the person to do the deal without asking too many questions. Or they simply buy someone, who is prepared to take a calculated personal risk for a reasonable reward to see how advisers have been used.

It is only a matter of time before prosecutions are brought against legal representatives who have not covered themselves as they should. They will also act as a deterrent to others, even others outside the profession.

Stamping on the passing of money resulting from criminal activity into the legitimate economy is viewed as a primary objective in the fight against crime. By cutting off the flow of spendable money, it is hoped that the criminal activity itself will become less attractive.

It is a long-term objective, so it is nonsense to argue that there have been no prosecutions so far will mean that there will not be any in the future. The law applies to all people and to all businesses, albeit in different ways.

There is a marketing opportunity here. The sale of audit services, to see whether your client has complied with those aspects of the law which apply to them, is an area best done by lawyers, especially before the accountant see the word "audit " and grab the business for themselves. Once the audit is completed, there is the opportunity to advise on compliance. And like all audits, this should become repeated business.

How does any criminal practitioner, solicitor or barrister, who has represented a non-legal aid client in the past and knows of convictions and also that the client, despite having money, has no visible means of support, accept payment for his services.

Lawyers should make sure that they don't get used by the money launderers or prosecuted for failure to comply with the applicable law. Again, we say to professionals - beware and be careful.

The writer is a legal consultant on banking and stock market laws.